Court Interference of arbitration in Kenya
Arbitration is a means by which conflicting parties seek a settlement through a third person but without courts involvement. However, this is fiction as courts have interfered numerous times or due to the parties' approach from the initial stages of the process.
Arbitration is a means by which conflicting parties seek a settlement through a third person but without courts involvement. However, this is fiction as courts have interfered numerous times or due to the parties’ approach from the initial stages of the process. Legally, when parties resolve to seek settlement by arbitration, what they mean is that the final decision on the matter rests with the arbitrator, through the courts may have to intervene to regulate the proceedings. The parties must also agree that the arbitrator’s decision is binding to both of them; otherwise, it would not reference arbitration.
Arbitration Act, Act No. 4 of the 1995 laws of Kenya and the Arbitration Amendment
Act of 2009 stipulate court intervention’s role before, pending and after Arbitral proceedings in Kenya. Both the Arbitration Act 1995 and the Amending Act 2009 give the courts legal provisions to intervene in arbitration matters. Has the granting of authority to the courts to intervene in arbitration matters facilitated the arbitration process, or has it acted as a hindrance to the process? Such is the question this article aims to expound. Parties engaged in arbitration have always used the courts to delay or frustrate the arbitration process. Parties have also sought court intervention to overturn the awards, especially if the ruling does not favour them. How can the trend be stopped, or what measures and regulations are needed to protect the arbitration process from interference by the courts? There are legal grounds that permit the parties to seek courts intervention, but also, there are specific instances or scenarios that courts are mandated to intervene. Is the Court a friend or an enemy to the determination of cases by arbitration? To determine the usefulness or lack thereof, we have to understand the Court’s role in the arbitration process then analyze their impact on the success or failure of the process.
The Role of the Court in Arbitration
The UK Arbitration Act of 1996 stipulates the principles that govern arbitration as follows –
- The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;
- The parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest;
- In matters governed by this party, the Court should not intervene except as provided by this party.
If we choose to infer to the above principles, the courts should be restricted when and if it seems to incur unnecessary delay and expense in the arbitration process. Furthermore, the courts involvement should guarantee free and fair resolution of the disputes. The parties involved have the autonomy to how the arbitration should proceed and should not be interfered with by courts except for public interest. In Kenya, the approach to the intervention by the courts is stipulated in the Arbitration Act 1995, Sec. 10 that states:
“Except as provided in this Act, no court shall intervene in matters governed by this Act.”
The section provides a restriction to courts in matters of arbitration. The courts therefore have no jurisdiction to interfere with arbitration only to issues that the Act stipulates. The section agrees with the UK Arbitration Act 1996 that provide the parties with the autonomy as to the form the proceedings will take. The section recognizes the value of restricting the Court’s role in the arbitration process because it ensures the parties’ autonomy is preserved and guarantees the parties’ satisfaction with the arbitration process. It also ensures that the resolution is achieved without unnecessary delays and expenses by the courts. The interpretation of Section 10 provides two scenarios where the courts might intervene in arbitration. The first case is the Act gives the court permission of intervention and in the second scenario is in the case of public interest where injustice is likely to occur.
Courts intervention before arbitration
The law provides at least two cases where the courts may intervene in a matter subject of arbitration before the start of any efforts to refer the dispute to arbitration. These are:
- Stay of legal proceedings.
The courts can be granted power to compel arbitration indirectly and when a party applies to an arbitration agreement.
- Interim measures of protection
Interim orders are given by the courts to preserve the status quo pending and during arbitration. Section 7 of the Act limits parties’ freedom to seek any arbitration agreement that limits or bars the seeking of interim protection measures in courts.
Courts intervention during arbitration
The Act provides the following interventions by the High Court of Kenya during arbitral proceedings.
- Appointment of arbitrators
The courts can step in scenarios where there is no agreement between parties, failure to appoint a sole arbitrator or one of the two arbitrators or failure to appoint a third arbitrator by the two arbitrators.
- Challenging arbitrators through Court
The parties may challenge the arbitral tribunal. The High Court has the liberty to either uphold the rejection of the challenge or remove the arbitrator, a decision that is final and not subject to appeal.
- Determination of the tribunal jurisdiction
A party may challenge the tribunal’s ruling by seeking the High Court’s intervention on its jurisdiction questions. The petition should be made 30days after the award, and the High Court’s ruling is final.
- Interim orders for protection during tribunal.
The Act gives the court powers to enforce the arbitral tribunal’s orders in matters pertaining to the interim measure of protection. The High Court possess the same powers of temporary protection as the arbitral tribunal.
- Help in taking evidence for use in arbitration.
Upon the request of either the tribunal or either party, the High Court has the power to take evidence for use in a tribunal.
- To determine a question of law.
During arbitration, a question of law may arise that needs interpretation. In such cases, the parties will make an application to the High Court to seek interpretation. However, in this case, the High Court’s decision may be appealed to the Court of Appeal if the parties agree, and the High Court grants it. In case the high Court refuses grant of appeal, the aggrieved party may seek leave to appeal to the Court of Appeal.
Court’s role after arbitration
It deals with courts intervention after an award has been made with its role in setting aside, recognising, or enforcing the arbitral award.
The Act stipulates that an award may be set aside by the High Court if one of the parties was under an incapacity. When it is validated that the arbitral agreement contravened the laws that govern the dispute, the proper notice for the arbitrator or proceedings’ setting was not given or if the award deals with a dispute that does not fall within the scope of the terms to the arbitration. The High Court can recognize or enforce an arbitral award regardless of the state in which it was made. Subject to relevant provisions of Arbitration Act 1995, the High Court, on application by the arbitral tribunal, enforce the matter.
Is Court’s intervention good or bad?
Courts intervention and its effect on arbitral matters is hinged on three factors, namely: the provision of the law on its intervention, the general policy, the attitude of the Court on its role in arbitral matters and the approach of lawyers and their clients on court intervention, It a mixture of all the stakeholder’s approach and attitude towards intervention. The spirit of the law envisions the Court as a guardian to protect the arbitration process, guide the arbitration process, and ensure justice and fairness are reflected in the awards. From the look of things, it is a great idea to have the courts intervene. However, we have also to keep in mind the people involved in the procedure.
The arbitration act 1995 and the civil procedure Act section 59 contains guidelines on Court’s intervention. The chances of the rules and the laws to conflict are high, given no one placesource for the law on the matter. However, it is essential and justified for the Court to intervene on the issues discussed above. For example, the stay of proceedings application ensures that the arbitration agreement is in effect by protecting it against a filed suit by a party in breach of the contract. The interim measure of protection ensures that the status quo of the subject matter is protected. It recognizes the reality of things that the arbitration process doesn’t happen overnight. It is rational and follows logic for the law to provide the courts with intervention measures during arbitration. For example, the Court’s role in the appointment of arbitral tribunal envisions a situation where both parties would disagree on the appointment of the said persons. The Court then is a default mechanism placed by the law to take care of such difficulties threatening arbitral proceedings. The law also provides the chance to challenge the arbitral tribunal is likened to the opportunity accorded to challenge the bench under civil proceedings. This ensures that justice and fairness are upheld and cushions against challenging the arbitral award by either party on the arbitrator’s credibility. If left, this would result in delays and expenses in holding new arbitral proceedings if the challenge succeeds. The opportunity to challenge the jurisdiction of the tribunal is significant because jurisdiction is everything. This helps the party not put up with an award of a tribunal whose jurisdiction is in doubt and would be challenged whether in substance or procedure.
The courts under the law is permitted to help the tribunal in matters that the arbitral tribunal cannot undertake or compel. For example, the collection of evidence, enforcement of interim measures of protection and the interpretation of questions of the law are issues that the tribunal needs help from the courts. In civil proceedings, parties are allowed to appeal on issues that touch on questions of the law, and parties in an arbitration agreement cannot be restricted to use that right.
It is quite justified for the courts to be given powers by the law to intervene after the award. Setting aside arbitral awards that manifest injustice on a party is not debatable since the purpose of the law is to ensure justice and fairness for all. Unless the Court enforces arbitral awards, they cannot be enforced under the law. The adoption of the awards by the Court ensures the award is binding under the law. Its adoption by the courts means that they cannot just rubber-stamp awards without due diligence since the courts are the custodian of public policy. Adopting an approach that contradicts the spirit and letter of the constitution may create a precedence that diminishes Kenya’s laws. The courts therefore have to scrutinize the awards and ensure it is legally corrected. This process also accords the party adversely affected by the award a right to be heard in the interest of justice.
But while the court interventions are rational, the provisions relating to them have some form of ambiguity and not perfect. For example, the stay of proceedings is marked with unnecessary conditions that disadvantage even a well-meaning court in the application’s execution, especially when the plaintiff is not receptive. The law is strict in its stipulations, which means that when an application for stay of proceedings is mistakenly admitted a day after entry of appearance, the judge has no other option but to dismiss it.
The provisions of court intervention require reforms to fine-tune them. The procedure for applying the Court’s intervention is stringent, which gives lawyers the latitude to manoeuvre to delay arbitration proceedings. The rules that govern such applications should be relaxed to ensure justice for either party without tranny or abuse. For example, the Court’s intervention’s application should not be dismissed based on the wrong procedure but upheld with regard to justice and fairness to the parties need to avoid delays in arbitration. The law should also be amended to allow arbitration applications to be heard according to priority.
The vagueness of the law governing arbitration has led to a flurry of applications on the constitutionalism of various issues arising from arbitration proceedings. In support of these applications, the legal provisions governing arbitration cannot be reasonably interpreted as replacing the rights of parties to fair and justice hearings as entrenched in the constitution. The opponents claim that arbitral hearings are private and not in the public domain, and so by choice, the parties are assumed to have waived access to any public remedy. But if we extrapolate this argument, it does not account for the limitations of the freedom to contract as one cannot contract away their fundamental rights. Some have argued that law provides adequate mechanisms that should be exhausted first before any judicial review application. This argument presents the problem that it negates the fact that human rights are, by nature, urgent and emotional, and remedies meant to enforce them should be invoked despite other alternatives. It goes without saying that when one feels aggrieved by arbitral proceedings, their first instinct is to doubt the arbitrator’s jurisdiction. Therefore, it is unfair to force the aggrieved party to first submit to the arbitral tribunal before the Court can entertain any application of the same. Nobody would subject themselves to an arbitral process knowing very well that it would inhibit their constitutional rights. Therefore, the law should give parties the latitude to make it a fair and just process. The fact there’s a judicial review is motivation enough for the tribunal to act fair and just.
Presently, the courts see arbitration as a way to help it get rid of the backlog of cases, and as such, the law should make necessary reforms to make arbitration as fair and just as possible. Lawyers and parties in the habit of misusing court intervention to delay the arbitration process must be curbed. Law schools and legal professional organizations need to train lawyers on the ethics to uphold. Laws need to be enforced to state when lawyers are in breach of the arbitration process.
The arbitration process is part of Kenya’s justice system, and as such, the court intervention cannot be dismissed. The Court’s role cannot be a foe, but a lot of adjustments need to be made to make it more effective.